TOKYO (Nikkei)–Construction material demand is rising as the nation begins the enormous task of rebuilding the areas devastated by the March disaster, while redevelopment projects in Tokyo also push up cement and steel prices.
Tokyo cement prices have risen this month to around 10,600 yen a ton from roughly 10,100 yen, the first increase in two years. Taiheiyo Cement Corp. (5233), Sumitomo Osaka Cement Co. (5232), Tokuyama Corp. (4043) and others asked raw-concrete producers, their major customers, in February for price hikes of 1,000 yen or more to reflect higher costs for materials. In the end, the concrete makers accepted hikes of 500-700 yen.
Cement prices have climbed as rebuilding efforts get underway. Shipments of raw concrete have increased for use in such projects as the construction of breakwaters in Aomori and Fukushima prefectures.
Demand for construction projects involving office buildings and hotels in central Tokyo has also buoyed cement prices. “Construction demand is soaring in reaction to the drop-off in capital spending that followed the Lehman shock,” says Atsushi Takagi, analyst at Morgan Stanley MUFG Securities Co.
Meanwhile, demand for H-beams, a key construction material used in the frames of buildings, has also picked up as quake reconstruction gathers steam. H-beam inventories were down 9,100 tons, or 4.2% on the month, to 206,300 tons as of July 31, according to data tabulated by a trade organization made up of distributors of Nippon Steel Corp. (5401). This marked the first inventory decline in seven months.
Reflecting strong demand in the quake-hit Tohoku region, H-beam inventories there were down a whopping 8.5%.
The overall pickup in construction is expected to give large and midsize general contractors year-on-year order growth in the year ending next March, the first rise in five years.
(The Nikkei Aug. 11 morning edition)